How to Protect Your Real Estate Business Against Cyberattacks?
Cyber security is not always a top priority for real estate owners and managers, but it should be. In 2021, several cyberattacks have been reported at small- and medium- size companies around the country. Property managers and real estate investors owning multi-family properties are not the exception. In addition to the more traditional claims such as wind, hail, fire, and general liability, insurance carriers are seeing an increasing trend for Cyber Liability.
Prior to the pandemic, most small business owners believed a cyber-attack was unlikely to happen to them. However, with COVID-19 phishing attacks jumped from 5,000 to 200,000 during March and April in 2020. In addition, according to Identity Theft Resource Center: “The number of data breaches publicly reported so far this year has already exceeded the total for 2020, putting 2021 on track for a record year.” It is important to understand cyber-attacks will continue to rise year after year.
Cyber criminals are becoming more creative with their approach to obtain your client’s information. Many property managers and real estate investors believe they are not a target for a cyber-attack, but they are underestimating their risk. Whether it is a small management company with only a handful of properties or hundreds of rentals, the business has the same business exposure by collecting their tenant’s personal and financial information. Therefore, budgeting for cyber liability protection should be included with the annual expenses.
How could real estate investors and managers protect their business against cybersecurity threats?
In addition to having a cyber security training for their staff, having the necessary technology to protect them from future attacks and an adequate IT support, business owners should also invest in a Cyber Liability policy. It could be purchased as an individual policy or included as an endorsement with your business policy. Cyber insurance is designed to cover your business liability, apartment complexes, property managers and condominium association against a data breach containing sensitive information for your clients or tenants.
Cyber liability insurance is relatively new and has become the fastest growing line of coverage over the last 15 years. Few industries are immune to the risk of data breaches that can include customer, vendor, or employee data. The costs associated with the breach include defense and judgment costs from lawsuits as well as notification, credit-monitoring expenses and reputational damage.
What are the three most common examples of cyber risks for property managers and real estate investors?
- An ex-employee has access to your system and your tenant’s information.
- A lost smart phone, iPad or laptop which has access to your company’s files.
- Phishing email leads to ransomware.
Companies who are successful will budget for a cyber liability policy or endorsement. The best defense against cyber-attacks is to educate your office and have the best technology support to assist you when you suffer a cyber-attack. If you would like to discuss more regarding cyber liability for real estate investors and managers, please contact me. I am an experienced insurance agent specializing not only in hazard insurance and general liability insurance, but also cyber liability.
I would like to end our January’s newsletter by appreciating all the members of ICOR for reading my monthly insurance content. I hope to continue bringing interesting information regarding insurance for your, home, business, and properties. If you have a specific topic you would like to learn about, please contact me and I would be happy to discuss it.